NOTE 7. ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses for the three month periods ended March 30, 2012 and 2011, and for the year ended December 31, 2011 is as follows:


		Three Months Ended				Year Ended
		March 31,				December 31,
Dollars in thousands		2012		2011		2011

Balance, beginning of year	$	17,712	$	17,224	$	17,224
Losses:
Commercial		31		1,827		506
Commercial real estate
Owner occupied		283		-		508
Non-owner occupied		395		-		78
Construction and development
Land and land development		365		-		3,568
Construction		-		-		-
Residential real estate
Non-jumbo		126		860		3,178
Jumbo		87		643		1,511
Home equity		-		-		346
Consumer		32		55		162
Other		20		10		86
Total		1,339		3,395		9,943
Recoveries:
Commercial		2		28		35
Commercial real estate
Owner occupied		3		-		37
Non-owner occupied		8		9		55
Construction and development
Land and land development		5		2		43
Construction		-		-		-
Real estate - mortgage
Non-jumbo		19		11		83
Jumbo		9		1		14
Home equity		60		1		1
Consumer		14		50		112
Other		29		2		51
Total		149		104		431
Net losses		1,190		3,291		9,512
Provision for loan losses		2,001		3,000		10,000
Balance, end of year	$	18,523	$	16,933	$	17,712

Activity in the allowance for loan losses by loan class during the first three months of 2012 is as follows:


		Construction & Land
		Development
		Land &							Commercial Real Estate					Residential Real Estate
		Land								Non	-
		Devlop- Construc-				Commer-			Owner		Owner		Non	-				Home			Con	-
Dollars in thousands		ment		tion		cial			Occupied		Occupied			jumbo		Jumbo		Equity				sumer			Other			Total

Allowance for loan losses
Beginning balance	$	7,261	$	120	$	770		$	1,335		$	3,283	$	2,587	$	1,331		$	831		$	161		$	33		$	17,712
Charge-offs		365		-		31			283			395		126		87			-			32			20			1,339
Recoveries		5		-		2			3			8		19		9			60			14			29			149
Provision		242		368		(2	)		5			485		274		733			(83	)		(6	)		(15	)		2,001
Ending balance	$	7,143	$	488	$	739		$	1,060		$	3,381	$	2,754	$	1,986		$	808		$	137		$	27		$	18,523

Allowance related to:
Loans individually
evaluated for impairment	$	3,070	$	418	$	203		$	140		$	439	$	574	$	753		$	111		$	2		$	-		$	5,710
Loans collectively
evaluated for impairment		4,073		70		536			920			2,942		2,180		1,233			697			135			27			12,813
Loans acquired with
deteriorated credit quality		-		-		-			-			-		-		-			-			-			-			-
Total	$	7,143	$	488	$	739		$	1,060		$	3,381	$	2,754	$	1,986		$	808		$	137		$	27		$	18,523

Loans
Loans individually
evaluated for impairment	$	36,402	$	735	$	2,998		$	13,986		$	14,585	$	5,944	$	15,689		$	353		$	330		$	-		$	91,022
Loans collectively
evaluated for impairment		51,810		1,413		96,388			139,542		261,142			213,541		47,147		50,531				21,244			2,540		$	885,298
Loans acquired with
deteriorated credit quality		-		-		-			-			-		-		-			-			-			-			-
Total	$	88,212	$	2,148	$	99,386		$	153,528	$	275,727		$	219,485	$	62,836	$	50,884			$	21,574		$	2,540		$	976,320